"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business. During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers. When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlancGary Bode, CPA: giving isn't always about tax deductions. But if you'd like a free phone consult, call (910) 399-2705.
In my opinion, some charitable institutions prey on the elderly through misleading mail solicitations. The barrage of high pressure requests can ultimately decrease the joy of giving.
Common Scams on the Elderly
- Sometimes un-requested gifts like address labels, bracelets, pens, etc. are used to instill a sense of obligation to contribute. By law, you can keep any un-requested gift and incur no obligation. This concept extends beyond charities too and encompasses true mail order fraud.
- Sometimes solicitations come disguised as a bill or invoice, strongly implying there is an obligation to pay, perhaps because of some unremembered pledge or prior gift from the institution. The law requires a disclaimer on such mailings, but these can be cleverly worded and still be legal.
- Sometimes requests come from organizations that don’t have tax exempt status with he IRS.
“I suggest proactively structuring your charitable giving instead of responding emotionally to mail or phone requests.”
-Gary Bode, Wilmington NC CPA
Suggestions on Structuring Major Charitable Contributions
Major charitable giving should be a component of an overall personal financial, and/or, estate plan. Sometimes trusts like the CLT (Charitable Living Trust) or CRT (Charitable Remainder Trust) are appropriate.
Giving isn’t always about Tax Deductions, but…
if you want to use your charitable contributions as tax deductions on Schedule A:
- Save your cancelled checks and other proof of charitable donations. The IRS has tightened scrutiny on charitable giving in recent years. Even though proof is only required on cash gifts greater than $250, on an IRS audit, it’s best to have documentation on all donations, especially if you are generous. I suggest listing each organization on Schedule A with the amount.
- If a fund-raising appeal bring tears to your eyes but tells you nothing about the charity’s functions, check it out carefully before responding. I like to know what percentage of the contribution actually goes to the charitable cause instead of over head. Many have high operating expenses, meaning only a low percent of your donation actually goes to the charitable purpose.
- Giving to individuals is not tax deductible. So, for your generosity to be tax deductible, it has to pass through a qualified tax exempt charitable organization.
- Find out if the contribution is tax deductible. Not all soliciting agencies are tax exempt.
- A contribution may not be fully deductible. For example, if you receive DVDs of the Perry Como Show as a reward for a contribution to public TV, only the portion of your donation above the fair market value of the DVDs is deductible.
- Contributions are deductible in the tax year they are paid not pledged.
- Don’t be pressured into giving. Sleep on it.
I’m a tax CPA with a virtual office to accommodate long distance clients. I feel the hundreds of posts on this website reflect my abilities and attitude. If you’d like a free phone consult a free consult please call us at (910) 399-2705.
